Entergy Arkansas is proposing to charge customers $135 million over two years to make up for federally ordered reimbursements that were made to other Entergy-owned utilities in neighboring states.
The request before the Public Service Commission would increase rates by $62 million for residential customers and by $70.4 million for businesses and industrial customers. It would increase rates for customers with specialized lighting by about $2.5 million.
The typical residential customer would pay $4.13 more per month, adding about $50 to the customer’s annual electric bill. The total rate increase for Entergy Arkansas’ 700,000 customers would be spread over two years.
The request has been suspended pending review by the commission staff. A group representing large industrial and agricultural customers also is studying the proposal, noting that Entergy shareholders — not Arkansas ratepayers — should bear the burden of the reimbursements.
“This is a very significant rate increase and something we’re concerned about,” said Steve Cousins, executive director of the Arkansas Electric Energy Consumers. “We don’t want Entergy customers to pay for something that did not benefit them.”
New Orleans-based Entergy Corp. delivers electricity to customers in Arkansas, Louisiana, Mississippi and Texas through operating companies in each state. The current cost-recovery case in Arkansas is part of a tangled history dating back to 1982, when the Arkansas utility and its sister companies agreed to joint planning for the generation and transmission of electricity.
That agreement was monitored by the Federal Energy Regulatory Commission.
From 2000-2009, Entergy Arkansas made sales of short-term energy to companies outside the Entergy system. The Louisiana Public Service Commission challenged the sales, and federal regulators ruled that they violated the system agreement and ordered Entergy Arkansas to reimburse its sister utilities.
The ruling found that Entergy Arkansas’ “cost allocation was ambiguous in the way that we accounted for the sales,” said company spokeswoman Kerri Case. “There was nothing we did wrong in making the sales, the problem was how we accounted for the sales on the books.”
In December 2018, to comply with the federal ruling, Entergy Arkansas made payments of $135 million to its affiliates in Louisiana, Mississippi and Texas. Those Entergy-owned utilities were responsible for crediting customers’ bills to reflect the reimbursements.
State regulators ordered Entergy Louisiana to issue billing credits in January, February and March to benefit customers.
Now, Entergy is asking Arkansas regulators to allow the utility to recover from Arkansas customers the $135 million that was reimbursed to consumers in Louisiana, Mississippi and Texas. “The company is proposing to recover the amount over a two-year period to mitigate the effect on customers,” Entergy said in a filing before the Arkansas commission.
Donna Gray, executive director of the Arkansas commission, said staff needs more time to study the proposal. “This is a significant issue from the staff perspective and we will take time to evaluate it,” Gray said.
There is no timetable to bring the issue before the three-member commission for a final decision, with Gray noting staff could propose a schedule of public hearings.
Entergy Arkansas contends that federal law allows the utility to recover the payments made to its affiliated companies. “Our costs are recoverable from ratepayers,” Case said.
The utility built its cost estimates around a plan that would have implemented the rate increases July 1. That plan, however, is in limbo because of the delay in the case.
Case would not speculate on whether the delay could increase costs even more. “It all depends on how long it takes to get through this process,” she said. “There will be some modifications depending on how this looks when it is finished.”